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Clarity

Jared Iverson

United States

Avid advisor of startups and helping entrepreneurs solve the many problems they face. Founder of Healthfundr.com. Securities attorney. Capital raiser. Language learner. Sold everything I own and moved my six-person family to an island in Brazil. As a current entrepreneur and former corporate/securities attorney at a large international law firm, I understand firsthand both the legal and business hurdles entrepreneurs face. I've also received excellent press for my past startup, including Forbes, Washington Post, GigaOM, Venturebeat, and many others.

Answers

I'll keep try to keep this answer brief, but there are several factors and nuances that can be discussed in more depth. Where you decide to incorporate partly depends on what your future goals are with your company. Companies that plan to seek venture capital or go public typically choose Delaware as the state of incorporation, and usually choose a C-Corp. Delaware has a very well developed body of law surrounding corporate governance and that provides comfort and more certainty to future VC investors. If you're not planning to seek VC money any time soon, an LLC is a smart decision because of the tax benefits it can provide to you as the owner.

It sounds like you want to grow your company on your own without outside financing. If that's the case, I would recommend forming your LLC in California. Regarding California vs. Delaware, one benefit to forming your LLC in California is that you can avoid paying a registered agent fee which can cost anywhere from $100-200 a year. If you plan to seek venture capital down the road, you can reincorporate in Delaware.

You've received good advice. I'd just add one thing. We recently interviewed dozens of developers. After narrowing it down to a handful of individuals that had personalities and resumes we liked, we paid a developer friend of ours a few hundred bucks to interview the developers and thoroughly vet them from a technical standpoint. It was well worth the money to have someone more technically skilled than us contribute to our due diligence on the candidates.

A good fundraiser is a good networker. They're able to charismatically convey the vision of your organization to potential donors/investors. You should sense a lot of charisma and energy in your interviews with a potential fundraisers. A good fundraiser must also have an impeccable reputation for honesty and transparency so your company's reputation isn't tarnished. The person should a strong, extensive existing network among individuals who would make ideal candidates as donors/investors for your enterprise. Finally, the best fundraisers are usually the founder/CEO of the company raising funds since they should be unmatched in their passion for the entity they're raising funds for. I'm happy to hop on a call if I can help any further.

If I'm understanding your question correctly, you're asking if it's a good idea to use a video to explain to potential crowdsourced investors how your platform works? The answer is yes. Video content is an excellent medium for conveying a succinct, compelling message in a crowdfunding campaign. However, the quality of the video must be good so you don't convey mediocrity. No video is better than a poorly made video. I'm happy to hop on a call if you'd like further guidance.

I know this situation well. It can be awful. You have to take strong and immediate action to show that you or your company haven't been complicit in the alleged crime or that your company didn't attempt to hide or cover up anything. You said the allegations are likely false. Without knowing the facts it's difficult to say, but you have the tough decision of whether you distance yourself from the employee, which is likely the right thing to do for your company. You want to stay out of the media and hope it passes soon. This means being silent at appropriate times, but speaking up when necessary to clear your name. I'd be happy to hop on a call and discuss if you're still dealing with this problem.

The technical legal answer is unless your subscription agreement or convertible note allowed for some type of rescission right, a contract was formed when he executed the subscription doc that generally can't be unilaterally rescinded.

From a business and relationship standpoint, you may want to allow him to rescind anyway. As an entrepreneur myself who's raised outside capital for my own company and helped other companies raise capital, I've learned you don't want investors on your cap table that aren't advocates of your company, or who may cause problems or take too much of your time. This is somewhat unique since he already holds a convertible note and has money in your company whether he converts or not. You have to determine what effect enforcing the contract will have on his relationship with your company and whether it will do more damage than good. Have you tried having a meeting or call with him to talk through and understand his concerns?

Because of the nature of your consulting business (web development) you have the advantage of being able to effectively offer your services remotely. I think more important than deciding between a large or small city, is finding a city where you would enjoy living and building a network. Is there a city where you have a critical mass of friends, family, potential business partners? Is there a city you'd simply be happier in because it fits your lifestyle, whether it's access to outdoors or city living?

Do you have a more specific market segment you'd like as your clients? Do you want to service just tech startups? Health tech startups? Larger companies? Unless you plan to really narrow down into a specific niche, like consulting just for the aerospace industry where the companies are usually found in a specific city or region, web development offers you a lot of geographic flexibility. More and more companies like Automatic or Zapier have completely remote teams and the trend towards that is only accelerating.

Choose a city where you'll be happiest and most likely to be able to participate in the lifestyle the city provides. Not only will you be more productive if you're happy, you'll have more opportunities to grow your network organically by meeting friends through your hobbies or social activities that then turn into clients.

I'd caution against being overly analytical or coldly rational when making this decision. Follow your gut. Choose a city you'd love to live in and grow a business in. I know wildly wealthy and successful entrepreneurs in cities both small and large.

Jared is empathetic and will look out for you as an entrepreneur. He walked us through our 83B election form and answered any concerns and questions we had about shares, incorporation, and vesting. I am now more equipped on how to structure my corp in light of different of the different forms and practices out there. If you are looking for help, Jared is a good guy to go to before you commit your business to other legal services.